My name is Fred and I am a gay conservative living in Ottawa. This blog supports limited government, the right of the State of Israel to live in peace and security, and tries to expose the threat to us all from cultural relativism, post-modernism, and radical Islam.
I am also the founder of the Free Thinking Film Society in Ottawa (www.freethinkingfilms.com)

Thursday, February 24, 2011

The 21st Century belongs to Canada...

The chief economist of the International Energy Agency recently did some crystal ball gazing in Toronto on what the future of energy might look like and his conclusions are worth a look.

A few aspects of Fatih Birol's presentation stand out, namely where the world's oil supply is going to come from, the implications of the growing natural gas glut and the role of renewable energy in decreasing greenhouse gas emissions.

Anyone who still hasn't grasped the significance of Canada's oilsands resource would do well to pay attention to the IEA's analysis.

Between 2009-2035, the IEA shows that more of the world's incremental oil production will come from a smaller number of producers. The fact the 13 names are primarily members of the Organization of Petroleum Exporting Countries, as well as the name at the top of the list being Saudi Arabia shouldn't surprise anyone.

But what might raise a few eyebrows are the non-OPEC producers that are on the list, not to mention those that are not.

The IEA's analysis puts the second largest producer as Iraq -which of course presumes the country will be able to develop its massive oil reserves. This, of course, depends on political stability that, in turn, will attract much needed foreign capital and expertise.

The third, fourth and fifth spots are occupied by non-OPEC players: Brazil, Kazakhstan and Canada.

The rest of the spots are filled by OPEC players; the country notably absent from the analysis is Russia.

What does all this mean in the context of what's going on today?

Plenty.

Brazil and Canada, and to a lesser extent Kazakhstan, represent the rising importance of the unconventional oil reserves. Brazil has its deepwater plays, Canada the oilsands and much of Kazakhstan's oil lies below the Caspian Sea.

What's even more interesting is the role Canada will play -even as production ramps up in Iraq. There has been a good amount of discussion in oil circles of late on the question of the impact more oil produced from Iraq could have on the demand for Canada's oilsands.

The one conclusion to draw from this is fairly clear: increased production from Iraq is unlikely to have a negative impact on the demand for Canada's unconventional barrels; the world is going to need every drop of oil because of the surging demand for cars in China and other developing countries. According to Birol's presentation, the number of cars on the road by 2035 will be 1.6 billion, with more than half in China and the developing world.

The other take-away from the presentation from Canada's perspective is that the importance of the oilsands in meeting the world's energy needs is going to more than offset the ongoing opposition from environmental groups to the continued development of the resource.

The environmental organizations may well want to protest in Washington, D.C. -as they did on Wednesday -warning this time of heightened safety risk associated with pipelines carrying oilsands crude into the U.S. because the oil is apparently more corrosive and could result in another spill. The groups were asking the government to suspend new permits for pipelines into the U.S., a move clearly aimed at the yet-tobe approved Keystone XL pipeline that would carry oilsands crude to refineries in the Gulf Coast.

But Birol's analysis is fairly clear those barrels are important in meeting the world's incremental demand -especially in the absence of other viable substitutes. Birol notes the growing presence of renewables, but also notes that they remain dependent on government subsidies -to the tune of $205 billion by 2035 from $57 billion in 2009.

0 Comments:

Links to this post:

My name is Fred and I am a gay conservative living in Ottawa. This blog supports limited government, the right of the State of Israel to live in peace and security, and tries to expose the threat to us all from cultural relativism, post-modernism, and radical Islam.
I am also the founder of the Free Thinking Film Society in Ottawa (www.freethinkingfilms.com)